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Edited Transcript of KMPH earnings conference call or presentation 10-Mar-16 9:30pm GMT

Q4 2015 KemPharm Inc Earnings Call

Apr 5, 2016 (Thomson StreetEvents) -- Edited Transcript of KemPharm Inc earnings conference call or presentation Thursday, March 10, 2016 at 9:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Jason Rando

Tiberend Strategic Advisors, Inc. - IR

* Travis Mickle

KemPharm, Inc. - Chairman, President & CEO

* LaDuane Clifton

KemPharm, Inc. - CFO

* Tracy Woody

KemPharm, Inc. - Chief Commercial Officer

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Conference Call Participants

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* Tyler Van Buren

Cowen and Company - Analyst

* Ashley Ryu

RBC Capital Markets - Analyst

* Rohit Vanjani

Oppenheimer & Co. - Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the KemPharm fourth-quarter 2015 corporate update call. (Operator Instructions) I would now like to introduce your host for today's conference, Mr. Jason Rando. Sir, you may begin.

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Jason Rando, Tiberend Strategic Advisors, Inc. - IR [2]

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Thank you. Good afternoon, everyone, and thank you for joining our call today. At this time, I would like to remind our listeners that remarks made during this call may contain forward-looking statements that involve risks and uncertainties and are subject to changes at any time including, but not limited to, statements about KemPharm's expectations regarding future operating results.

Forward-looking statements on this call are made pursuant to the Safe Harbor provisions of the federal securities laws. Information contained in the forward-looking statements is management's beliefs based on current expectations and is subject to change. Actual results may differ materially from forward-looking statements. KemPharm disclaims any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments, except as required by law.

There is more complete information regarding forward-looking statements, risks, and uncertainties in the reports KemPharm files with the SEC. These documents are available on KemPharm's website at www.KemPharm.com, under the investor relations section, and we encourage you to review these documents carefully.

Speaking on today's call will be Travis Mickle, President and CEO, who will provide an update on KemPharm's corporate and clinical development achievements as well as the recent regulatory announcements involving KP201/APAP. LaDuane Clifton, CFO, will review KemPharm's fourth-quarter and year-end 2015 financial results; and Tracy Woody, Chief Commercial Officer, will provide an overview of KemPharm's commercialization strategy for KP201/APAP.

At the conclusion of the remarks, we will then proceed to a question-and-answer session. I now turn the call over to Travis.

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Travis Mickle, KemPharm, Inc. - Chairman, President & CEO [3]

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Thank you, Jason, and thanks, everyone, for joining the call this afternoon.

2015 was truly a transformative year for KemPharm, starting with our successful IPO last April and ending the year with the filing of our NDA for KP201 with acetaminophen. We continue to build the business operationally, now as a public company, as a research and development organization with our additional products and technology that we introduced in 2015 and the early part of 2016, as well as commercially with the advancement now of KP201 with acetaminophen towards the potential approval in June.

Even with all the success that we had in 2015, we are even more excited about what lies ahead for us in 2016. I would like to highlight just some of the recent events that have occurred so far as we really get excited about what's upcoming for this year.

Number one, we would like to point to the recent close of our successful financing during a very turbulent time for both the healthcare industry and the market, as well as our notification of acceptance for review of our NDA for KP201/APAP. With that notification, we received a priority review of six months' review time and the PDUFA date set for June 9, based not on the acceptance date, which would have been expected from the FDA guidance in prior practice, but based on the filing date.

Additionally, we also filed out IND for KP511, recently highlighted in our continued success in advancing our technology through important milestones. To that, we remain focused on advancing at least one new discovery candidate into the pipeline every year, as we did last year with the advancement of KP746, our ER prodrug of oxymorphone. At the same time, we want to file at least one new NDA each year to expand our available products, which we feel are truly differentiated in the marketplace with long composition of matter based patterns.

Looking forward into 2016, certainly the PDUFA of KP201 with acetaminophen is a very important milestone for the organization as well as KemPharm's transition from a development company to a commercial entity. We are also looking forward to the data from our proof-of-concept studies we have planned for both KP511 and KP415 in this year. We expect to see KP511 have proof-of-concept data in the second quarter of this year, as well as proof-of-concept data for KP415 in the second half of this year.

Additionally, based on results of our studies with KP201, we found that at high oral doses KP201 releases statistically lower amounts of hydrocodone when compared to other hydrocodone combination products. We have provided this information to the FDA and are working to start two additional studies to investigate the possibility that KP201 could reduce respiratory depression, which may help reduce the risk of overdose. Both these studies are planned to start this year, with future guidance as to their completion.

It should be noted that no other opioid or formulation of an opioid has demonstrated the ability to self-limit exposure to the opioid at high doses and this data would be a critical part of getting this affect into our label for KP201.

With that background and forward-looking approach to KemPharm in 2016, I would like to now turn it over to LaDuane, who will discuss our financial results.

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LaDuane Clifton, KemPharm, Inc. - CFO [4]

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Thank you very much, Travis. Our quarterly results for Q4 2015: we had a loss of $9.2 million, or $0.64 per share, and that is compared to a Q4 2014 loss of $11.8 million, or $4.97 per share. The main -- the improvement in net loss quarter over quarter was primarily driven by a lower change in the fair value of our warrant liability in comparing the two quarters.

Use of cash during Q4 of 2015 was $7.7 million, which included the payment of the $2.4 million PDUFA fee we submitted with the KP201/APAP NDA. We expect that amount to be refunded in Q1 since this was our first NDA filed with the FDA. Our burn rate has remained in the range throughout 2015 in between $5 million to $7 million per quarter.

Looking to the 12-month results, net loss for the full year 2015 was $54.7 million, or $7.42 per share, compared to 2014 of $24.5 million and $10.27 per share. Again, one of the key drivers was this non-cash adjustment to fair market value of the warrant liability on the balance sheet.

Our cash position at 12/31 2015 was $51.3 million. That's cash, cash equivalents, and marketable securities. And as Travis alluded to, on February 9 we announced the closing of the offering of $86.25 million of 5.5% senior convertible notes which will come due in 2021. Net proceeds from that offering were $82.8 million, of which $18.6 million were used to repay our term notes.

On a pro forma basis, combining those proceeds with our 12/31 cash balance, we would have a balance of $115.5 million. We believe this positions us well to continue advancing our product pipeline as well as begin the launch of KP201 in APAP.

So with that I will turn it back over to you, Travis.

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Travis Mickle, KemPharm, Inc. - Chairman, President & CEO [5]

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Thanks, LaDuane. As I mentioned previously, KemPharm is preparing extensively for KP201 with acetaminophen's upcoming PDUFA date of June 9. At the time of approval, KemPharm will be informed of the schedule that the FDA recommends for KP201 with acetaminophen.

As you may recall, based on the compelling data, we requested a Schedule III from the FDA while all the other opioids in this class are the more restrictive Schedule II. Once approval occurs, that scheduling recommendation is provided to the DEA in order to ultimately write that recommendation into law.

In the past this process has been quite variable, but with the recent passage of a new law, this process is now shrunk down to approximately three months. That three-month timeline typically goes off the post recommendation from the FDA.

With that in mind, KemPharm has adopted a dual path approach to the commercialization with a focus on preparing internally to launch the product, while at the same time discussing the possibility of a partnership. To...


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